U.S. Housing Market Pricing and Mortgage Rates – January 2025

KEY POINTS

• Sales of homes have fallen 4.9% in January 2025 from the prior month.
• 1.18 million total homes for sale in January. This is an increase from 3.5% since December and 17% from January 2024
• Median prices for homes sold in January was $396. This is a growth of 4.8% YoY and the top price for any month of January ever.

Initial January Outlook 2025

What we have seen for quite some time now is that the U.S. housing market has continued to weaken. Buyers are staring down the barrel of high mortgage rates and sky-high prices with short supply. Preowned home sales have decreased by 4.9% over January to 4.08 million units, higher than the original estimate of 2.6%. Sales were only 2% above January 2024 but still at a 15-year low.

“Mortgage rates have refused to budge for several months despite multiple rounds of short-term interest rate cuts by the FED,” said Lawrence Yun, chief economist for NAR. The absurdly high home prices have been reluctant to decrease making housing affordability a large barrier to most home buyers (NAR).

Sellers Pricing Themselves Out of the Market

January 2025 home sales totaled 1.18 million, an increase of 3.5% from December 2024. Comparatively this is a 17% from January 2024. A six-month supply is considered balanced between buyer and seller. We have seen the average home on market time last month, January 2025, was 41 days on the market. This is the longest period since January 2020, pre-covid.

The growing supply is beginning to pressure the high prices. The median price of the home sales in January is $396,900 with a growth of 4.8% from the previous year. Also being the highest price ever in the month of January. It was noted that roughly 15% of all homes sold above listing price. This is pretty much identical from December and January 2024.

Last Words

“Even though more housing allows for strongly qualified buyers to enter the market. But polling of many consumers has shown that lower preference to lower mortgage rates for them to purchase,” Yun said. All-cash offers totaled 29% of the total market, down from 32% the year before. First-time buyers are still having trouble coping with the higher-than-average prices and mortgage rates, accounting for 28% of sales. This is tremendously lower than the historical average of 40%.

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